Evaporating Hope (by Brendan Burke)

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Verse I

I use price alerts across a wide spectrum of non index stocks to show me whats happening outside the manipulated or at least suspect dow naz and spy. Yesterday several of them tripped and the shadow world beneath the dow started to panic.

Lets look at a fine example of the non index backroom hopefuls.

BSDM – The story in a nutshell. They have some kind of awesome phaser that shoots a hot anti cancer death ray. Wow. What do they really do? Who cares. The point is they released a headline on September 22nd that states:

A Phase III study, which utilized the BSD-2000 Hyperthermia System, demonstrated that patients with high risk soft-tissue sarcomas were 30% more likely to be alive and cancer free almost three years after starting treatment if targeted heat therapy (hyperthermia) was added to their chemotherapy treatment.

Good enough for blind optimism to pile in. Never mind the fact that the company has been releasing the same headline since the 1980's. Lets look at what happened next:

Solid! Pretty exciting pop but look closer at the filing and what do you see? 3% institutional ownership. Dimensional Fund Advisors is the largest institutional owner with 466,864 shares. This safely identifies BSDM as a probable valueless stock (which i think comprises about 96% of the stock market but thats another post) and is therefore only good in a bullish era or in the unlikely event their technology becomes viable. 

The illusion of value is only sustainable when the market is absorbing optimism in the form of hopeful capital.

The stock pulled back as it should but what happened to it this week:

It fell off the line it had formed in the 2.50ish area and is now trading at its pre pop anti cancer headline share price. BSDM and all its ilk are probable canaries for the market at large and should warrant attention. 

Verse II

I am a closet admirer of the Bear Masters here as I do not short stocks. I always play long no matter what (except for extreme events) because I believe real value is a rarity, therefore stocks are kept high on an illusion and magic is far more powerful than reality. Reality is what sends stocks down and I am terrible with reality. 

Earnings gaps have been strong against market headwinds as of late and the first hour scalps have been superb. Look at NTRI and PEET yesterday. Most of the time I don't know what I am going to scalp until after the open when my screener data kicks in but today so far my pre open list has MOT (droid release) and AKAM (strong name post earnings play).

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